As the Modi government launched a major initiative to promote investment and employment, it became apparent that most of the action was the unfinished agenda of 1991. But the economic reforms of the 1990s have been a subject of economists’ and political scientists’ fancy. Of particular interest has been its parentage (success, as we know, has many fathers). Sanjay Baru adds to this literature in his new book, where he gives us a racy, ringside view of the year as it unfolded. This is an interplay of the economic crisis, domestic politics and the global environment. His familiarity with the events, his access to the key players and the lucid writing makes the book difficult to put down. Calling 1991 a landmark year, he breaks his story in seven parts, corresponding with selected months.
For January, the book gives us a clear insight of the caretaker government of Chandrasekhar and how it accepted the reality of the post Cold War world, and forged new relations with the US. The next chapter shifts the focus to the economic crisis and the pragmatic acceptance by the government of the solutions like mortgaging gold and structural adjustments. Baru’s fortuitous engagement with Indian officials gives him a rare access to the ongoing negations with the IMF as early as December 1990. The next chapter is the essence of the book, capturing the dynamic within the Congress party after the tragic assassination of Rajiv Gandhi and the reversal in the fate of the party in the second phase of elections. Here, Baru takes liberties as a political scientist, visualising a scenario in which Rajiv Gandhi had not been assassinated. His conclusion is that PV may well have emerged as a consensus PM even then. The underlying hypothesis of the book is that, even though a consensus on the sweeping economic reforms (an idea whose time had come) had emerged within and outside the government and the economic crisis made them inevitable, PV was destined to be the man of the moment. By Baru’s reckoning of the situation then, Chandrasekhar was never going to last and Rajiv Gandhi would not have got a majority.
In the succeeding chapters, Baru details the government formation and the fiscal and other economic reforms. He gives details of the decision-making process, leading to the devaluation of the rupee and other reforms. The picture that emerges is of a man with a mind of his own, picking his own team, including Manmohan Singh (not his first choice). The political highlight of the year is the Tirupati session, where PV becomes Congress president, disrupting the hereditary succession. In doing this, Baru subtly contrasts PV from the picture he painted of Manmohan in his earlier book. A key quotation attributed to PV is: “The FM is like a zero, its value derives from what you put before it, which is the PM”.
The book is essentially about PV, because in this account, politics overtakes economics. The author acknowledges the role of the external forces at play, but credits PV for having the wisdom and courage to discard the Nehruvian model. The underlying assumption is that Nehru would have continued to believe in socialism if he had been around in the later part of the 20th century. My personal experience has been otherwise. We all swore by central planning as the most efficient and equitable economic system as students in the 1970s. Today, most of us are ardent opponents of state control. On the way, we lost the two anchors in USSR and China and saw the gains from private enterprise and open globalised markets. Nehru or PV, or Modi—they only reflect the needs of the times we live in.
From the insiders’ (read, the much-maligned babus) perspective, the reforms were more than due in 1991 and there was no way India or any other country could have deferred them. More importantly, India did far lesser than most other countries, which has now become a major constraint on sustaining high rates of growth. The question is not whether it was PVnomics or Manmohanomics, but why there was need for Modinomics. In his effort to lionise PV, the author underplays the way information and communication technology and globalisation have changed the world.
(Sunil Bahri has been a bureaucrat in ministries related to finance and commerce)